Computerization of RBs

Transcription

1 59 th Charter Anniversary Symposium Computerization of RBs October 25, 2016 Rural Bankers Roadmap for Growth and Development

2 Why Institutions Should Invest In Technology ( In relation to BSP Circular 808-Guidelines on Bank s IT Risk Management ) Growth and Expansion Regulations Competition Process Enhancement and Risk Management RBs Increase Market Share and Healthy Bottom-line

3 How Tough is the Competition? Who are our Competitors? Commercial and Universal Banks in RBs BDO and TPG Growth Investment Fund Entry in ONB, PBCom in BDI and RBNI, EastWest in Green Bank, PBB in Insular Bank, and BPI in Rizal Bank. Cooperatives, Pawnshops, Money Transfers and Remittance Centers (Quasi-Banking Operations) RBs Foreign Banks (Liberalization of Banking Law and Impact of the Asean Economic Integration) Commercial and Universal Banks in Thrift Banks ChinaBank s Acquisition of Unity Bank and Planters Bank to Merge with China Bank Savings, UnionBank s Acquisition of City Savings Bank and Korea s Woori Bank Entry to WealthBank

4 The Foreign Banks (New Players in Philippine Banking) United Overseas Bank

5 The Foreign Banks (New Players in Philippine Banking) First Commercial Bank of Taiwan With Pending Applications

6 Philippine Banks Need More Strengthening BSP s Statement Relative to RA (July 2014): Amending the Foreign Banks Law by Removing the Limit of Foreign Banks in the Country (The Philippine Star, November 5, 2015) Bangko Sentral ng Pilipinas (BSP) stressed the need for Philippine banks to shape up amid intense competition from the entry of foreign banks into the country and economic integration in the region Banks operating in the country need to beef up and strengthen their operations to survive intense competition from regional banks. As we ve liberalized entry of foreign banks, we can expect more competition. Our local banks will have to review their business models to see where they can continue to have comparative advantage. Philippine banks need to improve on how they do business such as being smart in choosing their target markets and products, as well as leveraging off technology. BSP Governor Amando Tetangco Jr

7 BSP Urges Focus On Unbanked Municipalities The Bangko Sentral ng Pilipinas (BSP) is urging Rural Banks to beef up their presence, especially in unbanked municipalities to help sustain local economic growth and boost consumption and productivity: Rural Banks should continue to expand in areas not reached by universal and commercial or big banks by establishing Micro-Banking Offices (MBOs), in areas where it is not economically feasible to establish a full-blown branch BSP Governor Amando Tetangco Jr. During an event of the Rural Bankers Association of the Philippines (RBAP) The Philippine Star By Lawrence Agcaoili, May 31, 2016 If geographical expansion is not being part yet of the Rural Bank s game plan, you can always improve your products and services in terms of design and delivery You are still in areas where other players are not. Take advantage of this position to strengthen your foothold so that you will be more resilient when competitors come

8 A Quick Glance at Competition Are We at par with our Competitors? Technology Innovations, New Banking Channels, Automated Processes and Other Key Automation Initiatives Fully Integrated and Online Branches, Offices and Channels Regulatory Compliance and Risk Management Requirements Business Strategies, Marketing Innovations, Aggressiveness and Competitive Mindset (Remittance, Payment System, Centralized Credit Verification and Scoring Through LOS) Evolving Trends of Customers Needs and Preferences Capability to Offer, Handle and Manage Electronic Banking Products and Services, Processes and Channels (ATMs, POS. Internet, Mobile)

9 The Regulatory Requirements PDIC (Philippine Deposit Insurance Corporation) AMLC (Anti-Money Laundering Council) BSP s MORB Proposed Amendment Section X306 (Regulations on Past Due and Non-Performing Loans) BSP s Credit Risk Rating and Provisioning Requirements (BSP Circular 855) The Regulations For Banks BSP s IT Risk Management Guidelines (BSP Circular 808) BANCNET (Electronic Banking Channel Gateway) PCHC (Philippine Clearing House Corporation) BSP s Effective Interest Rate Calculation Models (BSP Memorandum No. M ) BIR Regulations on Doc Stamps on Loans and Gross Receipts Tax

10 Today s Banking Trends C U S T O M E R S The Traditional Banking On Site The 24/7 Banking On Your Lap and Tab The 24/7 Banking On Your Card Banking Anywhere and Anytime The 24/7 Banking On Your Finger Tips

11 Fee-Based Income Potentials (Through Income Generating Products, Services and Electronic Channels) ATM Transactions Foreign and Local Remittance NRPS (Electronic Payment System) ATM Transaction Fees, and Convenience Fees Balance Inquiry Cash Withdrawal Bills Payment Fund Transfer Prepaid Reload Cash Card Issuance Centralized Credit Verification and Scoring System Through Loan Origination System (LOS) Internet Banking Transaction Fees POS Transaction Fees, and Convenience Fees POS Transactions Balance Inquiry Cash Withdrawal Bills Payment Fund Transfer Prepaid Reload POS Purchases RBs Balance Inquiry Bills Payment Fund Transfer Prepaid Reload Mobile Banking Transaction Fees Balance Inquiry Bills Payment Fund Transfer Prepaid Reload

12 Today s Banking Trends Limitations That RB s Are Facing Are We In this Game Technology Applications and Infrastructure are Expensive by Nature Budget Constraints and Restrictions Inadequate Technical Expertise and Implementation Experience Inadequate IT Products and Services to serve the Increasing Demand of the Emerging Markets for Amazing Experience Coping with Change and Managing Transitions

13 The Critical First Step Set-up a Central Data Center and Network Communication and Security Infrastructure Establish a Centralized Private Cloud Based CASA Host for Small RBs RBs Establish a Centralized Private Cloud Based ATM Switch Host for Small RBs Set-up a Centralized Private Cloud Based Hub for Other Services; such as Loan Origination System, Credit Verification and Scoring System, Remittance, Electronic Payment System and Other Shared Services Channels

14 On Top of the Drawing Board RB3 RB4 RB5 RB6 RB7 Branch B Branch A RB2 Backhaul (IPVPN or IPSec DSL) CASA Host ATM Switch Host BSP, AMLC, PDIC, CIC IPVPN Branch C RB1 Other Services Host BancNet, PCHC Branch B Branch A RBAP Data Center

15 Preparing For The Future of Banking ( Understanding the Generations) Generational Differences ( Bridging the Gap: Re-Defining Banking ) COMING SOON (To Be Determined)? GENERATION Z (Born in 1999 to Present) TRADITIONALISTS (Born in ) 12 Years Span BABY BOOMER (Born in ) 18 Years Span GENERATION X (Born in ) 11 Years Span Patriotic, Patience, Honor, Linear Work Style, Don t Deal with Ambiguity Self-Reliant, Hurry Up Attitude, Lack of Organizational Loyalty, Independent Optimism, Involvement, Willing to go the Extra Mile MILLENNIALS (Born in ) Diversity, 21 Years Span Sociability, Expect to be Paid/Served Well

16 Preparing For The Future of Banking ( The Entry of Millennials: Generation Y ) GENERATION X (Born in ) MILLENNIALS (Born in ) Characteristics of Millennials ( Generation Y ) Tech-Savvy Easily-Bored Always-Connected Open-Minded BABY BOOMER (Born in ) Self-Centered Confident Narcissistic Lazy Creative Problem-Solvers TRADITIONALISTS (Born in ) Achievement-Oriented Expect to be Paid/Served Well

17 Banking The Way Millennials Want To Be Digital Banking Online 24/7 The Millennial Customer Amazing Experience

18 The Future of RBs RBs We cannot become what we need to be By remaining what we are. - Max Depree - Cooperatives This is RBs Business to grow This is RBs Market to nurture Universal Banks/Commercial Banks Pawnshop and Remittance Centers This is RBs Foothold to protect Thrift Banks Foreign Banks